These two characterizations may sound the same, but they are quite different. Let me explain why it is important to view a company separately from its stock.
The overall stock market is more powerful than an individual stock. When the major indexes such as the Dow, Nasdaq, S&P 500 have a down day, your stock may decrease in price as well. The stock market, in the short-term, is driven by sentiment, geopolitical events, and traders who are focused on the next few months. Long-term investors are rewarded by looking into the future and ignoring distractions. If a company has the financial wherewithal, relevant business model, and a product or service that can withstand a rough patch in the economy, they will be fine long-term. Warren Buffett said it best, “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”
If you try to buy low and sell high, a broken stock is a much better investment than buying a broken company. Ask yourself where their stock price could be in the future, not where it came from. This can help you make an informed and confident decision when getting involved with individual stocks.
Thank you for explaining, and making the point that a company that has the financial wherewithal and a great product is in it for the long term. This does provide a stronger case for ‘staying in the saddle’ for the long ride.